Seasoned Equity Offerings: Stock Market Liquidity and the Rights Offer Paradox

24 Pages Posted: 27 Feb 2013

See all articles by Edith Ginglinger

Edith Ginglinger

Université Paris-Dauphine, PSL Research University

Laure Matsoukis

affiliation not provided to SSRN

Fabrice Riva

Université Paris-Dauphine, PSL Research University

Multiple version iconThere are 2 versions of this paper

Date Written: January/February 2013

Abstract

This paper examines the impact of market liquidity on seasoned equity offerings (SEO) characteristics in France. We find that, besides blockholders’ takeup, liquidity is an important determinant of SEO flotation method choice. We document higher direct equity offering flotation costs, but also improved stock market liquidity after public offerings and standby rights relative to uninsured rights. After controlling for endogeneity in the choice of SEO flotation method, we find that pure public offerings and standby rights are comparable in terms of direct costs and liquidity improvement. Our results provide new insights as to why firms choose public offerings despite apparently higher costs.

Keywords: seasoned equity offering, SEO, flotation method, flotation costs, rights issues, public offerings, liquidity, bid‐ask spread

Suggested Citation

Ginglinger, Edith and Matsoukis, Laure and Riva, Fabrice, Seasoned Equity Offerings: Stock Market Liquidity and the Rights Offer Paradox (January/February 2013). Journal of Business Finance & Accounting, Vol. 40, Issue 1-2, pp. 215-238, 2013. Available at SSRN: https://ssrn.com/abstract=2225663 or http://dx.doi.org/10.1111/jbfa.12007

Edith Ginglinger (Contact Author)

Université Paris-Dauphine, PSL Research University ( email )

Place du Maréchal de Tassigny
Paris, Cedex 16 75775
France

Laure Matsoukis

affiliation not provided to SSRN

No Address Available

Fabrice Riva

Université Paris-Dauphine, PSL Research University ( email )

Place du Maréchal de Tassigny
Paris, Cedex 16 75775
France

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